Minneapolis told to seek shorter deals with utilities

Article by: Maya Rao

Star Tribune

February 25, 2014 - 5:44 AM

Minneapolis should refrain from any takeover of electric and natural gas service in the near future and instead negotiate shorter, broader agreements with Xcel Energy Inc. and CenterPoint Energy to reduce greenhouse gas emissions, consultants told council members Monday.

“We realized early on that the status quo was not an option,” Mike Bull, of the Center for Energy and Environment, told members of the council committee that addresses environmental matters.

The nonprofit released a 101-page report that was eight months in the making and advocated a middle position between the rigidity of the city’s 20-year franchise agreements with Xcel and CenterPoint — which have not accommodated the city’s renewable energy goals — and last year’s controversial debate about forming a municipal utility.

Committee chair Cam Gordon and environmental advocates said they were not concerned that Bull, who led Monday’s presentation and is the nonprofit’s director of policy and communications, was a manager of public policy and strategy for Xcel until last April. The utility had fiercely opposed exploration of a municipal takeover.

Bull noted that he has worked in a variety of positions outside of Xcel, including on the regulatory side and as an environmental advocate, and that his experience working for the utility helped him better understand how Minneapolis could work with the company.

The report suggested that Minneapolis shorten the terms of utility franchise agreements — which give Xcel and Center­Point access to public rights of way in exchange for millions of dollars in fees — and include mandates that they report annually on reliability of service, energy use and more. It recommended the city pursue additional partnerships with Xcel and CenterPoint that work toward increasing renewable energy sources and conserving more energy.

How Minneapolis proceeds is important because the franchise agreements are set to expire at the end of the year. Without changing their structure, the city will likely struggle to meet its goal of reducing greenhouse gas emissions 30 percent by 2025, given that energy use from the electric and natural gas utilities is associated with about two-thirds of emissions.

The report said that the city could consider a municipal utility later on, if it worked to change legal barriers in Minnesota law. It also suggested another system already used in Chicago, Cincinnati and other jurisdictions that allows residents to choose their own electric supplier and have the city negotiate with the supplier on their behalf. That system was developed for states that, unlike Minnesota, have deregulated electric service.

Gordon expressed hope that Minneapolis could use the report to pioneer a new model for how cities work with utility companies to reduce their carbon footprint.

Such an arrangement is “a middle ground between just the utility running everything and … us taking over all the utilities,” said Gordon. He added: “I’m hoping it will open all sorts of new doors.”